paga

In a major setback for California employers, the California Supreme Court issued a decision in the matter of Williams v. Superior Court, wherein it ruled that an individual employee asserting a Private Attorney General Act (PAGA) action had the right to seek contact information of every other company employee throughout the entire state.

In Williams, a retail worker asserted various wage and hour violations against his employer, Marshall’s, as a representative action under the PAGA statute. Although the employee was located in the Costa Mesa store, Plaintiff’s counsel propounded discovery requests seeking the name, address, telephone number, and company employment history of each nonexempt California employee that had worked for Marshall’s throughout the state in the last two years. In response, Marshall’s refused to provide the information on the basis that the request for contact and employment information statewide was overbroad considering that the request extended beyond Williams‘s particular store and job classification and there were approximately 16,500 employees; unduly burdensome because Williams sought private information without first demonstrating he was aggrieved or that others were aggrieved; and an invasion of the privacy of third parties under California Constitution, Article I, section 1. Plaintiff filed a motion to compel in Los Angeles Superior Court.

Interestingly enough, during the hearing process, Plaintiff reduced its initial demand and instead stated he was willing to accept information from a representative sample of 10 to 20 percent of employees. However, the trial court denied the reduced request and instead ordered Marshall’s to provide information only for the Costa Mesa store where Williams worked, subject to a “Belaire-West” notice to the affected employees to guard their privacy rights. Williams appealed but the appellate court upheld the trial court’s order.

A unanimous California Supreme Court rejected Marshall’s arguments stating that “[c]ontact information regarding the identity of potential class members is generally discoverable, so that the lead plaintiff may learn the names of other persons who might assist in prosecuting the case.” The Curt further stated that limiting discovery “would grant the defendant a monopoly on access to its customers or employees and their experiences and artificially tilt the scales in the ensuing litigation.”

The Supreme Court also rejected that the procedural differences between PAGA representative actions and traditional class actions. In PAGA, unlike in class actions, employees identified in discovery are not considered parties or clients of plaintiff‘s counsel and do not subject plaintiff or counsel to scrutiny with respect to the ability to represent a large class. Putting these differences aside, the Supreme Court stated that the interests of plaintiff, counsel, and other potentially aggrieved employees are largely aligned as all “stand to gain from proving as convincingly as possible as many Labor Code violations as the evidence will sustain, thereby maximizing the recovery for aggrieved employees as well as any potential attorney fee award.”

The Supreme Court rejected the argument that the disclosure of the information should be limited or conditional. The Court held there was no basis for courts to condition the disclosure of contact information on prior proof of a uniform or companywide policy. Moreover, the Court held that the privacy interests of fellow employees elsewhere in California are addressed by conditioning disclosure on the sending of a Belaire-West notice, as was done for Plaintiff’s store.

This decision tips the scales in favor of employees such that Plaintiff’s counsel will now be able to broadly seek contact information for employees as a means to increase the value of its case. Defense counsel must now be aggressive in reducing the contours of PAGA claims at the pleading stage before the discovery process begins. Counsel will now have to be creative and aggressive in ensuring that some limits are placed on the information disclosed.

Contact our firm if you have any further questions about how to further structure your business in light of this result or if you are facing a PAGA lawsuit.

Sergio H. Parra is the lead attorney for L+G’s labor and employment practice. Sergio represents a wide array of employers and businesses in labor and employment related litigation in state, federal and administrative venues. Sergio is also called on a daily basis to provide practical advice on employment matters, including internal complaints and investigations, employment agreements and wage and hour matters.

This question was answered last week by the 9th Circuit of Appeal in the case of Arias v. Raimondo, (2017 BL 214215, 9th Cir., No. 15-16120, 6/22/17). This case arose from an earlier lawsuit in 2006 wherein Jose Arias sued his former employer Angelo Dairy in State Superior Court for various wage and hour violations, including failure to provide overtime, rest and meal periods, and under PAGA. The case had been hotly contested for over five years before it had been finally set for trial for August 15, 2011.

Ten weeks before trial, however, the Angelos’ attorney, Anthony Raimondo, hatched an ”underhanded plan” to have Immigration and Custom Enforcement (“ICE”) arrest and deport Arias at an upcoming deposition. Evidently, after Plaintiff Arias became aware of the plot, he instead agreed to settle the case to avoid the threat of deportation hanging over him and his family. It seemed liked the plot had worked.

However, two years later on May 8, 2013, Plaintiff Arias filed a federal lawsuit against his former employer and their attorney for retaliation under the Fair Labor Standards Act (FLSA). Although Angelo Dairy and its owners settled their part of this case early on, Arias continued his case against the attorney on the theory that he, acting as the Angelos’ agent, retaliated against him, by trying to him deported during the earlier lawsuit.
Although the FLSA primary wage and hour obligations fall squarely on the shoulders on the employers, the 9th Circuit held that the anti-relation provision of the FLSA, was specifically also applied to any agent or “person acting directly or indirectly in the interest of an employer in relation to an employee.” As such, the 9th Circuit rejected Mr. Raimondo’s argument that because he was never Arias’s actual employer, he could not be held liable for retaliation under the FLSA. There is no current word yet if Mr. Raimondo will try to seek review by the United States Supreme Court.

Regardless, this case presents several lessons that all employers should heed. First off, an employer must try to avoid temptation, during the heat of the litigation battle, to create additional risk for the company and, instead focus on narrowing the issues involved and winning a case on its merits. Involving federal authorities in a state law dispute not only raises certain moral and ethical concerns, but may also be a double-edged sword. A telephone call to ICE by an employer to report that one of its employees may not be legally entitled to work in the US, may lead ICE itself to also wonder about the reporting employer’s I-9 and employment verification practices. Most importantly, as evident by the Arias case, an employer must analyze and appreciate there are many protections under both federal and state law that prevent retaliatory conduct after a lawsuit or claim had been filed by the employee.

Lastly, any person involved in making HR decisions, whether as an employee or as attorney, must be cognizant that their own actions and electronic communications may be later scrutinized. In reaching its opinion, the Ninth Circuit Court’s opinion quotes from various text messages sent by Mr. Raimondo to ICE and other attorneys not only where he describes his deportation plot, but where Mr. Raimondo admits doing the same thing on five other occasions. Ouch. As stated by the Court, the FLSA is “remedial and humanitarian in purpose. We are not here dealing with mere chattels or articles of trade but with the rights of those who toil, of those who sacrifice a full measure of their freedom and talents to the use and profit of others… Such a statute must not be interpreted or applied in a narrow, grudging manner.”

Sergio H. Parra is the lead attorney for L+G’s labor and employment practice. Sergio represents a wide array of employers and businesses in labor and employment related litigation in state, federal and administrative venues. Sergio is also called on a daily basis to provide practical advice on employment matters, including internal complaints and investigations, employment agreements and wage and hour matters.